Correlation Between Global X and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Global X and Franco Nevada at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Silver and Franco Nevada, you can compare the effects of market volatilities on Global X and Franco Nevada and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Franco Nevada.
Diversification Opportunities for Global X and Franco Nevada
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Franco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Global X Silver and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Silver are associated (or correlated) with Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Global X i.e., Global X and Franco Nevada go up and down completely randomly.
Pair Corralation between Global X and Franco Nevada
Considering the 90-day investment horizon Global X is expected to generate 1.24 times less return on investment than Franco Nevada. In addition to that, Global X is 1.33 times more volatile than Franco Nevada. It trades about 0.19 of its total potential returns per unit of risk. Franco Nevada is currently generating about 0.31 per unit of volatility. If you would invest 11,832 in Franco Nevada on December 27, 2024 and sell it today you would earn a total of 3,887 from holding Franco Nevada or generate 32.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Global X Silver vs. Franco Nevada
Performance |
Timeline |
Global X Silver |
Franco Nevada |
Global X and Franco Nevada Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and Franco Nevada
The main advantage of trading using opposite Global X and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Franco Nevada can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franco Nevada will offset losses from the drop in Franco Nevada's long position.Global X vs. Amplify ETF Trust | Global X vs. VanEck Junior Gold | Global X vs. Pan American Silver | Global X vs. Coeur Mining |
Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold Ltd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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